How to Create A Nifty Visual Savings Goal Reminder

As I slowly save for a new vehicle (we’re planning on a Honda Odyssey or a Toyota Sienna), I’ve come to realize that saving for a specific goal like this often seems slow and a bit unrewarding. Sure, the bank account goes up over time, but it still seems as though the goal is a long way off.

Luckily, I’ve found a way that really inspires me to keep going towards that goal: a visual savings goal reminder. Essentially, you create a visual reminder of the progress you’ve made towards the goal (to feel good) that also reminds you how far you need to go (to motivate you) in terms of small steps that you can take quite often (making it seem possible).

Here’s how it works.

First, define your goal explicitly. Are you saving for a new car? What kind of car is it and how much will it cost? Are you saving for a home improvement? What’s the estimated cost on it? No matter what you’re saving for, try to define it specifically enough so that you have a rough idea of what it will cost.

Next, take that dollar amount and round it up to a nice, even number. Try to make the goal have at least three zeros on the end, if nothing else, and preferably just a single number followed by zeros. So, if you’re saving for a 20% down payment on a $280,000 house, your goal might be $56,000 or, even easier, just $60,000.

Then, figure out a dollar amount that you can easily save a couple times a week. Can you put away $10 a couple times a week? How about $25? What you’re doing here is figuring out the size of the pieces you’re going to use to build up to your goal. You want the pieces to be small enough so that you can do them regularly, but not so small that they individually don’t mean much.

This next step requires some math. First, divide the total amount of the goal and divide it by the amount you can regularly save. This will tell you how many times you need to save that amount to reach your goal. Then, take that number of payments and factor it using this tool. You’re going to want to find the factor pair where the numbers are pretty close to each other. So, if you’re going to need to make 2,500 payments for your goal, the pair you’ll want is the 50 by 50 pair. Got it?

Now, take a single sheet of graph paper and make a rectangle on it. Using that linked tool is really helpful – you can specify exactly the grid that you want. How big? Those two factor numbers you obtained above will do it for you – if your factor numbers are 50 by 30, for example, then one side should be 50 squares and one should be 30 squares. Cut that rectangle out, and then find a picture of what you’re saving for and tape the rectangle to it. Hang it on your fridge or somewhere else where you’ll see it over and over again.

At this point, start saving. Each time you can save that small dollar amount in a savings account, put it in the account and then color in a square on the rectangle grid. You don’t even need to look at the savings account balance, just make those contributions and then color in a square each time you do it.

What happens? The constant reminder of the goal encourages you to keep saving money, and eventually you’ll find yourself putting “found money” into that account because it’s a lot of fun to fill in the squares and see yourself approaching the goal. Then, when you finally fill in that last square, it’s time to buy!

Some tips:

Get an online savings account, if you don’t have one already. An online savings account allows you to pull those savings bits right out of your checking account at your convenience, or even set up a plan to do it automatically (don’t forget to fill in the blocks, though). I’m a big fan of ING Direct (and use them for virtually all of my checking and savings needs) because of their ease of use, reliability, and association with a large international bank (ING).

Make an “extra” payment every once in a while. Make some frugal choices that free up the money to make an additional payment into that account that you didn’t expect, then go fill in that extra square. It feels really good when you start to realize that by not eating out and making a healthy meal for your family at home and also installing some CFLs, you bought and paid for a piece of your new vehicle/down payment/whatever your goal is.

Focus on one goal at a time. I find it’s much better motivation to focus heavily on one specific goal rather than a bunch of goals at once. Focus on saving for a car, then when you reach that goal, start another one. Spreading oneself out really hurts with focus – at least, that’s been true in my experience.

Ya know, that would be something interesting to tie into say mint.com or any other financial program.

Upload a picture of your goal, be it the model of the car or Disney World. Place a “mask” over it in the same sort of grid. OR Every time a payment is made, a square is removed. When you see the item, you get the item. It couldn’t be -that- hard to do in flash I would guess but I’m not familiar enough to write it off the cuff.

It keeps with your idea of telling at a glance how close you are, and making it concrete instead of an abstract dollar amount in some account. NICE!

I personally believe in this era of 0% interest to low APR a brand new vehicle is a frugal choice. I bought a new 06 F150 Ford Super Crew for a couple thousand BELOW INVOICE ( not sticker ) and financed thru ford for 60 mos 0 % interest. I took advantage of the last year’s model and got a good deal. Instead of purchasing a used vehicle I got a new one at a used price WITH awesome financing…

I use a similar method with an accountability factor. I’ve got a script that updates a bar on my blog with my current savings goal, and my over-all savings goals. This way, I update the amount and it’s displayed for the world to see. Some people may not be comfortable with sharing that much info, but for me, it gives me quite a bit of encouragement.

I highly recommend certified used vehicles as a better value than a new one. The last two cars we bought were Honda-certified lease returns in excellent condition, good factory warranties, and good price.

Yes, they were each a couple years old, but still late models that looked fairly new. They usually had about 25-30K miles, with plenty left on the important parts of the factory warranty.

And I got them for the price I wanted after checking Kelly Blue Book. We’ve had great use and no real problems other than regular recommended maintenance.

The difference between a current year new model would probably have been in the $8-10K, which is money we would rather spend on reducing other debt, etc., rather than *SHINY NEW CAR*.

ING actually does something like this for you now. It will let you enter what you’re saving for, the amount, set up an ASP (if you want) and keep track for you of your progress right in the account. It doesn’t have the nifty picture, but I really like this idea.

PS This is ING Canada I’m talking about, I’m not sure if ING US is doing the same thing.

You can also do this with a puzzle. Pick up a 100 piece puzzle at the $1 store, give each piece a number value (say, $10). Place the first few pieces on a sticky foam board/paper. Add a piece for each $10 you save until the puzzle is complete. Saving for a car? Buy a puzzle featuring a car. A trip? Get a puzzle with a topical getaway pictured. Works great for kids’ savings, too.

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